Savills Studley has acted in preferred provider position for CBS Radio in multiple markets. The radio advertising business was and is under pressure so we approached CBS on Chicago as we had ideas about how CBS could leverage the situation in their current building to reduce space and costs. Since they had a significant installation and infrastructure for live broadcasting, relocation would be a challenge. CBS occupied 82,000 SF and a lease expiring over 4 years in the future.
Their current building had experienced the loss of both of their anchor tenants and had well in excess of 500,000 SF coming vacant. The property had changed hands in a distressed sale and the new owner had taken control with a significant renovation and releasing budget. In addition the owner had expressed a desire to change the tenant mix to a more technology, media, and entertainment weighting. CBS certainly fit that mold. Finally, the Chicago office market had shown strong improvement for landlords, except for the East Loop where CBS was housed. In Chicago the East Loop is the last to recover in every cycle, so there was a window of opportunity there.
Savills Studley positioned CBS in the market for a future occupancy with a high identity requirement. Since CBS’s story of significant infrastructure needs validated the early market exploration we were able to bring multiple options into the competition. In addition through aggressive evaluation of their workplace strategy and space use we were able to reduce their space needs 65,000 SF and test fit into that reduced foot-print to prove it to the current landlord. With viable proposals and space plans showing our options we opened dialogue with the current landlord in the first quarter of 2014. CBS had an April of 2018 lease expiration, or 4 years later.
The existing landlord resisted our initial overtures; with so much space to fill the last thing they needed was additional vacancy but did not want to devote their re-tenanting and renovation dollars to an existing tenant with 4 year on the lease to go. This prompted us to further improve the deals on the outside economically as well as further develop the identity and “lifestyle” benefits of having CBS radio as a tenant. Again we brought those case studies of our great options back to the existing landlord.
In the end, by the first quarter of 2015 we had successfully convinced the current landlord to reduce the space by 11,000 SF 2+ years prior to lease expiration, provide a rental rate reduction, and a cash allowance. Total concessions were in excess of $100 PSF. The transaction was completed as the market in the East Loop was experiencing a meaningful recovery and CBS was able to beat that rise. CBS was able to gain significant occupancy cost reductions, maintain a high visibility presence in a building that had undergone significant renovations creating an improved overall workplace environment.
180 N Stetson Ave.,
Lease Restructure, Renewal
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Executive Vice President, Director, Central Region Lead
Executive Vice President, Managing Broker